Tackling The Housing Crisis In Europe
Introduction
The policy brief, published in December 2025 by the Foundation for European Progressive Studies (FEPS) and partners, argues that housing crisis unaffordability across Europe is not a temporary market glitch but a structural and systemic crisis. It frames housing as a fundamental right under threat from financialisation, commodification, and weak public oversight. With 8.8% of EU households spending over 40% of their income on housing and at least 1.28 million people homeless, the brief calls for a radical shift from market-led fixes to a rights-based, socially just approach. It focuses on three critical fronts: the chronic lack of social and affordable housing, energy poverty during the green transition, and the touristification driven by short-term rentals (STRs).
1. The Nature of the Housing Crisis: Structural, Not Cyclical
The document opens by establishing that housing costs have outpaced incomes across Europe for over a decade. Between 2010 and 2025, house prices rose by an average of 57.9% and rents by 27.8% across the EU. This is driven by:
Financialisation of housing: Housing crisis is increasingly treated as an asset class rather than a social good. Institutional investors and opaque global real estate capital flows have intensified speculation.
Weakened public powers: Decades of state retreat from direct housing provision, combined with EU-level policies that prioritise internal market logic over social rights.
Commodification: The rise of corporate landlordism and STR platforms has removed long-term rental stock from the market.
For the first time, housing has risen to the top of the EU political agenda, with a dedicated Commissioner for Energy and Housing and a mandate to deliver a European Affordable Housing Plan by end-2025. However, the brief warns that without structural measures, channelling resources could merely enrich private developers without delivering social benefit.
2. The Lack of Social and Affordable Housing
This section is the core of the analysis. The brief notes that public investment in housing development across OECD countries shrank from 0.17% of GDP in 2001 to 0.06% in 2018, while demand soared.
Key Data Points:
Average share of socially regulated housing stock in OECD countries is just 7.8%.
Netherlands leads with 34%, Austria 23.6%, France 14%, Italy 2.4%, and Greece has 0% social housing stock.
The term “social housing” varies wildly across member states, making EU-wide coordination difficult.
Policy Recommendations for Affordable Housing:
Increase public supply, not just demand subsidies:
Reverse privatisation (e.g., right-to-buy schemes) and expand public, social, and cooperative.
Prioritise reuse of existing stock and densification over new construction where possible.
Establish mandatory social impact analyses to prevent “social washing” by private investors.
Regulate markets and financialisation:
Introduce Europe-wide rent control frameworks, including statutory caps and anti-speculation taxes.
Limit corporate ownership of residential property.
Revise EU state aid rules to allow broader social housing provision (reclassify social housing as a Service of General Economic Interest).
Funding and governance:
Create direct EU-local government financing mechanisms bypassing national intermediaries.
Exclude housing investment from deficit calculations under the Stability and Growth Pact.
Ringfence social housing spending in all large-scale EU funds (e.g., Social Climate Fund, ERDF, ESF+).
Enforce the right to housing:
Binding EU legislation recognising housing as a fundamental right.
Comprehensive tenant protection against unreasonable rent hikes, illegal evictions, and predatory leases.
3. Energy Poverty: The Social Face of the Green Transition
Energy poverty is defined as the inability to keep homes adequately warm or cool without compromising well-being. It affects over 10% of EU households on average, but in Greece 19.2% cannot keep their homes warm (39.7% of poor households). The brief stresses that the green transition risks exacerbating inequality through “renoviction” (eviction after renovation) and post-upgrade rent hikes.
Key Gaps in Current EU Policy:
Over-reliance on high-tech solutions (heat pumps, smart systems) that low-income households cannot afford.
Fragmented data and monitoring, especially for marginalised groups like Roma communities.
Short-term subsidies (e.g., VAT cuts) that fail to deliver structural change.
Progressive Recommendations on Energy Poverty:
Targeted deep renovation with safeguards:
Prioritise worst-performing homes occupied by energy-poor households.
Binding conditionalities to prevent rent hikes after energy upgrades.
Integrate social and environmental criteria into public procurement for renovations.
Fair and accessible funding:
Shift from loans to upfront grants for low-income households.
Ensure Cohesion Policy post-2027 explicitly funds energy-efficient affordable housing.
Channel resources directly to municipalities and social providers, not just private contractors.
Energy democracy:
Support community-led energy cooperatives and neighbourhood projects.
Address both heating (northern Europe) and cooling (southern Europe) needs due to climate change.
Better governance:
Multi-level governance structures connecting national, regional, and local actors.
Intersectional indicators (gender, income, geography) to track energy poverty.
4. Short-Term Rentals (STRs) and Touristification
STRs (Airbnb, etc.) are identified as a visible driver of displacement and rent inflation. While not the sole cause, they intensify speculative exploitation by converting long-term housing crisis into de facto hotels.
Key Trends:
EU-wide, online platforms mediated 854 million guest nights in 2024, an 18.8% increase over 2023.
Southern Europe hosts 45% of total EU short stays (Spain, Italy, Portugal, Greece).
Growing professionalisation: most STRs are now operated by corporate actors, not individual hosts sharing their primary residence.
Policy Contradictions:
Some countries (e.g., Greece) treat STRs as a tourism business, focusing on taxation.
Others (Amsterdam, Berlin, Barcelona) restrict or ban STRs in stressed housing markets.
Recommendations for Regulating STRs:
Housing rights perspective:
Recognise STRs as a driver of unaffordability. Penalise conversion of long-term rentals into tourist lets.
Earmark tourist tax revenues for affordable housing crisis funds.
Local autonomy:
Guarantee cities the right to impose caps, zoning restrictions, or full bans in high-pressure areas.
EU policy must explicitly support stricter local measures, not override them.
Clear definitions:
Distinguish professional vs. non-professional hosts (e.g., thresholds on number of units or nights).
Restrict secondary housing from entering STR market.
Transparency and data:
Fully implement EU Regulation 2024/1028 on data sharing (effective May 2026).
Make registration data (unit location, density, prices, ownership types) publicly accessible.
Sustainable tourism integration:
Promote community-managed tourist accommodation as part of place-based renewal, especially in depopulated areas.
5. Country Case Studies: Finland, Greece, North Macedonia
The annex provides three contrasting realities that highlight why EU coordination is essential.
Finland (High social housing capacity but under strain):
Affordable housing: Demand exceeds supply; the abolition of the Housing Finance and Development Centre (ARA) weakens coordination. Housing benefit cuts have increased evictions and homelessness.
Energy poverty: Low overall (under 3% cannot keep homes warm), but concentrated in rural areas with electric heating. Policy focuses on social security and energy communities.
STRs: Surge in tourist hubs (Rovaniemi, Helsinki). New reforms (2026) cap STRs at 90-180 days per year and empower municipalities to restrict them.
Greece (Zero social housing stock, severe crisis):
Affordable housing: Only EU country with 0% social housing crisis. Homeownership fell from 77.2% (2010) to 69.7% (2024). Housing policies remain demand-side subsidies (loans, rent subsidies) – 83.96% of spending targets private owners, only 1% goes to pilot social rental programmes.
Energy poverty: 19.2% cannot keep homes warm (vs. EU average 10.6%); 32% in arrears on utility bills. Policies focus on short-term price compensation, not deep renovation.
STRs: 246,000 STR units (June 2025). Ban on new STRs in three Athens areas (from Jan 2025) but effectiveness unclear. Golden Visa programme (€800,000 thresholds in high-pressure areas) continues to attract foreign investment, inflating prices.
North Macedonia (Non-EU candidate, fragile systems):
Affordable housing: 87.1% homeownership but very limited social housing (under 2,000 units nationwide). No comprehensive social housing law (expert group only established Sept 2025). Roma communities face informal settlements with no sewage or drinking water.
Energy poverty: 24% of population (2020) – triple EU average. No official definition in new Energy Law (May 2025), though “vulnerable energy consumer” is defined.
STRs: Growing pressure in Ohrid, Struga, and Skopje. “Studentification” – foreign students (e.g., from Turkey) drive up rents in university towns like Stip.
6. Towards a Socially and Environmentally Just Housing Future
The brief concludes with a call for a binding EU Housing Rights Framework that establishes enforceable obligations, not voluntary recommendations. Key pillars:
Rights-based approach: Housing as a fundamental human right, with decommodification strategies and democratic control over housing markets.
Just green transition: Energy-efficient social housing must align with climate goals without excluding vulnerable populations. Maintain focus on ending homelessness by 2030 through Housing First approaches.
Coordinated European response: A broad progressive alliance (local authorities, public providers, cooperatives, non-profits) must lead delivery and monitoring.
Adequate and sustained investment: Housing spending must not be outcompeted by military and securitisation budgets, which threaten the European social model.
The document stresses that local authorities and community-based providers should take the lead, supported by direct EU funding mechanisms and strong tenant protections. Without tackling the roots of housing inequality – financialisation, speculation, and the treatment of homes as commodities – increased funding alone will fail.
Key Takeaway for Policymakers
The housing crisis in Europe is solvable, but only if the European Affordable Housing Plan prioritises:
Expanding public and social housing (not just public-private partnerships).
Regulating STRs and corporate ownership as a housing policy, not just a tourism or tax issue.
Ensuring the green transition is socially just – with deep renovation, rent caps, and upfront grants for low-income households.
Creating binding EU-wide rights and definitions while respecting local autonomy to implement stricter measures.
Without these structural interventions, the brief warns, the EU risks fuelling the same speculative dynamics that created the housing crisis in the first place.
Also Read: 10 Year's Affordable Housing Delivery and Financial Strategy